Supply chain and sourcing executives are approaching 2027 with cautious optimism, even as tariffs, geopolitical conflicts, regulatory changes and talent shortages continue to challenge the fashion industry, according to Sourcing Journal’s Executive Sentiment Survey.
Nearly half of respondents, 46.7 percent, described their outlook for supply chain operations as cautiously optimistic. Another 34.3 percent were neutral, while just over 12 percent were cautiously pessimistic and 6.7 percent were highly optimistic.
The survey also found that 47.6 percent of executives expect sourced-goods volumes to increase moderately, by between 1 and 10 percent, in 2027. A further 11.4 percent anticipate an increase of more than 10 percent, while 32.4 percent expect volumes to remain stable.
Respondents identified geopolitical instability as a major threat to supply chain continuity. Trade tensions, regional conflicts and regulatory shifts were described as moderately disruptive by 52.4 percent of those surveyed and extremely disruptive by 34.3 percent. Only 8.6 percent considered the impact manageable.
Escalating trade wars, sudden tariff changes and broad sanctions were the issues most likely to keep executives awake at night, cited by 56.2 percent of respondents. Higher operating costs followed at 28.6 percent. Other concerns included climate change, environmental requirements, forced-labor investigations, extended producer responsibility costs, labor disputes and shortages of skilled personnel.
Looking toward 2027, fluctuations in consumer demand and spending power were cited as the leading macroeconomic challenge, at 37.1 percent, followed by persistent inflation affecting raw materials and labor. More than 13 percent pointed to rising energy and transportation costs.
In day-to-day supply chain operations, inaccurate demand forecasting was the leading friction point, mentioned by 41.9 percent of respondents. Regulatory and compliance enforcement costs, including ESG requirements and Digital Product Passports, followed at 33.3 percent. Overstocks and stockouts were cited by 32.4 percent, while supplier capacity constraints and port congestion or maritime delays each received 23.8 percent.
Readiness for new sustainability and transparency rules remains uneven. Digital Product Passports are set for a mandatory phase-in for apparel and footwear in late 2027, while complete life-cycle and carbon- and water-footprint data across production stages is expected to become mandatory around 2030. In the survey, 38.1 percent of executives said their companies were moderately prepared, with systems still being developed. Nearly 30 percent said they understood the regulatory landscape but faced implementation hurdles, while just over 18 percent considered their companies fully prepared and compliant.
Many companies are also adjusting their manufacturing footprints. More than 37 percent of respondents said they were moderately shifting or diversifying sourcing locations. Total landed cost optimization, including labor, duties and freight, was the most important factor influencing new sourcing destinations, cited by 43.5 percent.
Vietnam was the most frequently named country for increased sourcing allocations, at 29.5 percent, followed by India at 28.6 percent, Bangladesh at 20 percent, China at 19 percent and Indonesia at 14.3 percent. The United States was cited by 13.3 percent, the same share as respondents who said they were not increasing allocations elsewhere.
artificial intelligence adoption remains largely experimental. More than half of respondents, 52.4 percent, said they were testing agentic or Generative AI through small pilot programs. Another 26.7 percent said AI was not currently a priority for their supply chain strategy, while 19 percent had moved beyond pilots and were scaling tools across their businesses.
Demand forecasting and inventory management were viewed as the areas where technology, including AI, analytics and automation, could deliver the greatest return by 2027, cited by 54.5 percent. Nearly 43 percent selected end-to-end logistics tracking and real-time visibility.
Capital spending priorities reflect that focus. Forty-one percent of executives expect to allocate capital to upgrades of core enterprise technology, while more than 40 percent cited advanced analytics, AI and machine-learning platforms. Sustainability initiatives, including circular design, green logistics and renewable energy, were also selected by 40 percent.
Overall, the survey depicts executives balancing positive expectations for business activity with significant pressure from volatile trade policy, regulatory obligations and uncertain consumer demand. Their responses point to regionalized, multi-hub sourcing, closer attention to landed costs and targeted investment in enterprise systems, analytics and sustainability, while broader AI deployment remains at an early stage.
Sources: WWD.